The University of Michigan will increase in-state tuition 1.6 percent and hike out-of-state tuition 3.4 percent next year.

The increase brings in-state tuition to $13,158 and out-of-state tuition to $41,578, one of the highest non-resident rates of any U.S. public university.

The eight-member Board of Regents passed the tuition increases in a unanimous vote Thursday during a public meeting at the Michigan Union. It was Mary Sue Coleman's last meeting as U-M's president. She retires July 14.

Regents also approved a 2.5 percent increase in the cost of housing and a $1.79 billion general fund budget.

The resident tuition increase is well below the 3.2 percent cap set by the State Legislature in order for U-M to receive full state funding, which this year will be roughly $295 million, a near $16 million increase over last year.

This year's increase follows similar increases last year that included a 1.1 percent hike for resident students and a 3.2 percent increase for non-residents. A decade ago, in-state tuition was $8,201 a year and out-of-state tuition was $26,027.

"I detest tuition increses and wish we never had to do them," said U-M Regent Denise Ilitch. "But this year and this particular budget, I feel very good about."

By increasing non-resident tuition at a higher rate than resident tuition, U-M is continuing a practice of using non-residents to subsidize low in-state tuition.

"Part of the reason the in-state can be so much lower is because we took a big chunk of the increased state appropriation and used it to hold the line on tuition," said U-M Provost Martha Pollack.

The tuition increase is coupled with student fee increases of $134 per year, including a $65 per term fee that will support gym and union renovations and a $4 increase in the Central Student Government fee.

The tuition increase, coupled with the fee increases, accounts for a total cost increase of $344 per year, or 2.6 percent, for in-state students. The fee increase was not unanimous, it passed in a 6-2 vote of the Board of Regents.

"I appreciate the students wanting more money, we all want more money," said U-M Board of Regents Chairwoman Andrea Fischer Newman, who voted against the student government fee hike. "I don't think every student on this campus should have to pay individually for this."

Operating budget

Meanwhile, regents approved a $1.79 billion operating budget for the coming year, up from $1.72 billion the year before. The fiscal 2014-15 year begins July 1.

Tuition is expected to bring in $1.28 billion in revenue, about 72 percent of the school’s general fund budget.

The budget increases centrally awarded student aid to $133.3 million, up $19.5 million — or 17.2 percent — from the year before. Pollack said the aid increase will allow U-M help lower the loan burden on middle-class resident students.

Some of the general fund increase will go toward hiring at least 60 new faculty within a two-year period. The goal, according to Pollack, is to decrease class sizes for undergraduates. The program is expected to cost about $6 million.

Housing
The 2.5 percent increase in housing rates is identical to last year's hike. A bed in a double room with a basic meal plan will cost $10,246 a year.

Four-fifths of the money raised from that increase will go toward funding the school's Residential Life Initiative.

U-M launched the Residential Life Initiative in the mid-2000s, and since then U-M has poured more than $550 million into improving its existing student housing facilities, $75 million in the residential life portion of North Quad, which opened in 2010, and $185 million toward a dorm for graduate students, which is under construction.

The initiative is aimed at creating spaces that facilitate both student living and student learning, and has modernized many of the historic dormitories built on Central Campus in the early 20th century.

"The connection between living and learning on this campus has never been stronger," U-M Vice President of Student Life E. Royster Harper said Thursday.

Other universities

Across the state, some universities have approved tuition increases, staying just below the 3.2 percent cap set by the State Legislature.

The Eastern Michigan University Board of Regents and Western Michigan University Board of Trustees have already approved 3.2 percent tuition increases for the coming year. The Saginaw Valley State University board hiked tuition 3.19 percent.

Michigan's two other research universities, Michigan State University and Wayne State University, have not voted on tuition rates yet this year.

To the south, The Ohio State University’s board of trustees voted earlier in June to freeze tuition for in-state students at $10,037. Out-of-state students will see a 5 percent increase to $26,537.

The Iowa legislature approved a tuition freeze at all public universities in the state earlier this year. The University of Massachusetts also froze tuition this year.